FRANCHISE LAWS FAQ FOR REFERENCE: READ MORE

What does the current EV demand look like?

Battery electric vehicles (BEVs) accounted for about 2% of all new vehicles sold, as of June 2021. This number is expected to grow exponentially over the next decade as EV ownership interest increases and given that the government and automakers have established goals to sell millions of EVs by 2030. Additionally, the government and private parties are investing heavily to expand recharging stations and infrastructure, which will make EV ownership easier and more convenient.

How many EVs are coming down the product pipeline?

Currently, 18 BEVs are on sale in the United States, and an additional 88 BEVs are slated to go on sale for model years 2022-2025. Entire brands have announced they are going all-electric, including Alfa Romeo, Cadillac, Jaguar, Volvo, and others.

[Source: Bank of America US Automotive Product Pipeline, June 2021]

What do franchise laws have to do with EV sales?

In all 50 states, legislatures have passed laws to regulate the buying, selling, and servicing of new vehicles through local franchised dealers. Given the unique safety, financing, and environmental issues with automobiles, state franchise laws are in place to protect the dealership model and ensure that consumers have access to choice and competition when buying a new car or truck.

Does buying a vehicle directly from the automaker save me money?

The short answer is no. Some party has to perform the service of retailing automobiles to consumers—either locally operated dealerships or factory retail stores. The costs of retailing exist regardless of which party owns the retail point. Further, when automakers own retail outlets, there is no competition to keep prices down. Under these circumstances, automakers may set prices and are not required to negotiate to remain competitive in the market the way dealers do. Peer-reviewed research by economists at Auburn University has shown that when car dealers compete, prices go down by nearly $500 per vehicle.

Why are dealers needed?

Dealerships don’t just sell vehicles, they also offer financing, titling, registration, trade-ins, recall work maintenance, and other services. And even if a manufacturer stops making cars—like Mercury, Saab or Suzuki—dealerships can still service those vehicles. 

Today, more than 16,000 franchised new-car dealerships across the country offer consumers a place to buy and maintain their vehicles. No automaker selling vehicles directly to consumers has the same breadth and reach as automakers that use the dealer franchise model.

What will be key to the mass-market adoption of EVs?

In the coming years, a vast number of battery electric vehicles (BEVs) ranging widely in price will be available for sale. As more and more consumers begin to adopt EVs, a large, expansive network of retailers and service providers will be needed to educate consumers, facilitate test drives and address unique differences in EV ownership to ensure consumers can confidently choose the best vehicle at the right price for their needs.

Selling vehicles in the mass market is different from selling luxury or niche vehicles. Locally based dealers are the best source to do this, as they live and work in the communities in which they serve and, in turn, understand the unique dynamics of their home markets.

Will EVs need as much service and repair work as traditional internal combustion engine (ICE) vehicles?

There is some speculation that EVs will require less maintenance than traditional ICE vehicles, but there is no research or data proving that. For example, all vehicles, regardless of powertrain, will at a minimum require brake and tire maintenance to stay on the road.

What is certain is that there will be many changes in the way vehicles are serviced. Gas-powered vehicles will be around for a while, and technicians experienced at working on these engines will still be needed. But the transition to EVs will require changes in the way consumer vehicles are serviced. 

How are dealers preparing for a fully electric future?

Dealers are making big investments to prepare for the mass-market adoption of electric vehicles and reduce the barriers to EV ownership, proving their commitment to the future. 

Dealers are outfitting their dealerships with traditional charging stations and super-fast Level 3 DC Fast Chargers (DCFCs). In the past dealers have had one or two charging stations at their locations; now some will have up to three or five—not just to charge their fleets, but to support vehicles for interested customers and for travelers who may be passing through. 

Dealers are also preparing for the greater electricity that will be needed to charge these new vehicles. Dealership employees have gotten up to speed and are now the EV experts in their communities, best positioned to educate customers on the latest EV technologies, guide them through the myriad state, local and federal incentives, and direct new EV owners to their closest charging stations.